JGBS: Belly Leads Rally, 20Y Supply & BoJ Tamura Speech Tomorrow

JGB futures are stronger and at session highs, +42 compared to the settlement levels.

• MNI BoJ board member Junko Nakagawa said today that the BoJ will adjust the degree of easy policy if the economy realises the bank’s forecast for theeconomy and prices as real interest rates remain at considerably low levels.
• However, Nakagawa added the BoJ needs to assess and judge rate hikes cautiously, taking the impact of volatile markets on economy and prices into consideration.
• The yen has gained 0.9% since the comments, reaching the strongest level versus the dollar since January.
• Cash US tsys are 2-3bps richer in today’s Asia-Pac session. The US presidential debate saw betting odds nudge in favour of Harris. The US market will now focus on tomorrow’s CPI and Thursday’s PPI inflation measures.
• Cash JGBs are richer across benchmarks, with the belly leading. Yields are 1bp higher (1-year) to 5bps lower (7-year).
• The swaps curve has bull-flattened, with rates flat to 3bps lower. Swap spreads are wider out to the 30-year.
• Tomorrow, the local calendar will see BSI Industry Confidence, PPI and weekly International Investment Flow data along with a speech from BoJ Board Member Tamura in Okayama.
• The MoF also plans to sell Y1.0trn 20-year JGBs.